S&P 500 sees worst weekly drop since March
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US equity traders grown accustomed to docile markets were shaken awake as tension over North Korea escalated, sending the S&P 500 to the largest weekly drop since March.
Those with an eye on the credit markets probably had an easier time navigating the carnage. A breakdown in high-yield bonds that began five days ago showed up in equities as stocks with the worst credit ratings led losses and balance sheet health separated the winners from losers.
Exchange-traded funds tracking large-cap equities and speculative debt fell by nearly identical amounts in the week. Data compiled by Bloomberg showed the division within the S&P 500, where companies with bond ratings below investment grade lost 3.4% on average, more than twice the 1.3% loss for higher-rated ones. Bloomberg
Gold surges to highest since early June
Gold futures extended gains to a nine-week high after a report showed US consumer prices rose less than expected, weakening the case for the Federal Reserve to raise interest rates.
Bullion futures for December delivery rose 0.3% to settle at $1,294 an ounce at 1:48pm on the Comex in New York. That’s the highest close for a most active contract since 6 June. It earlier added as much as 0.6% to $1,298.10. The metal climbed 2.3% this week, posting the fourth weekly gain in five.
The US consumer-price index rose 0.1% in July, a labour department report showed on Friday, trailing the 0.2% median estimate of economists surveyed by Bloomberg. Low rates boost the appeal of gold, which doesn’t pay interest. Bloomberg
Oil caps weekly drop amid shaky Opec compliance
Oil had its worst week in a month as compliance with Opec’s deal falters and the outlook for demand worsens.
While a weaker dollar helped push prices in New York 0.5% higher on Friday, erasing earlier losses, futures closed 1.5% down for the week.
The International Energy Agency (IEA) reduced demand estimates for Opec crude this year and 2018, and said there are doubts about the group’s commitment to cutting production.
Even a pledge by Saudi Arabia and Iraq to strengthen their commitment to the curbs isn’t helping.
Oil just hasn’t been able to stick to the $50 mark in New York even though US crude inventories are at their lowest since October, in part because recent declines are seen mostly as the result of summer demand that’s soon to fade.
West Texas Intermediate for September delivery rose 23 cents to settle at $48.82 a barrel on the New York Mercantile Exchange. The US benchmark hovered near its 100-day moving average during the session, a sign its recent rally may be losing strength.Bloomberg